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The normal distribution is a probability function that describes how the values of a variable are distributed. It is a symmetric distribution where most of the observations tend to lie around the central peak and the probabilities for values further away from the mean taper off symmetrically towards either extreme (Ahsanullah M. K., 2014). The mean, mode, and median tend to lie on the same point to attain symmetry. Furthermore, the data near the mean are more frequent in occurrence than data far apart from the mean.
In a business environment, normal distribution plays a crucial role in quality control as it aids in determining whether a product is standard or sub-standard by assuming previously set standards equal to mean. If a product lies below the mean, then its substandard and the vice versa is true.
It also plays a significant role in determining business cycles where the mean is set to be x-axis. The troughs are the recession points whereby the business is performing below the expected standards, and the crests depict boom points where the company is at its peak (Khotimah)
Furthermore, it is used in the Technology Evaluation Process: Most of the qualities of technology lie around the acceptance region, and only a few lie in the extreme areas, which represent inferior and very high-quality performances.
In a normal distribution, the area to the left of a curve is represented by the probability P(X > x), which represents a one-sided hypothesis. If calculated z value lies within the tabulated value, for instance, the size of shoes, whereby most women buy medium-sized shoes, we accept the hypothesis. Small and enormous sizes of shoes are outliers, and the company should concentrate on medium manufacturing shoes.
Also, the performance of most employees in a company lie within the mean and assuming a normal curve whereby it is a two-sided hypothesis. Inferior and high quality performing employees lie at the extremes side of the curve, indicating that if a company needs to be average in performance, then it should reconsider employee’s performance near the mean.
When a company is about to launch a new product on the market, then its price is of much significance. It must consider the cost of similar products pre-existing in the market, and in order to entice more customers, it should lower prices. The price should lie within the mean where most customers can afford it.
Mobile phone manufacturers usually consider the income of people whereby most income lie within the mean. Therefore in order to obtain maximum sales, it should manufacture affordable phones. Moreover, people go in touch with the current technology so they should upgrade the properties of phones as time goes by.
In order to encourage foreign expatriates, the American government sets its citizen’s salary to be lying around the mean. A normal distribution curve indicates that citizens from other countries lie at the extreme right end of the curve to stabilize the economy and bring more innovations in the country.
During festive seasons, flights are frequent, and therefore during such times, prices skyrocket because demand is very high. Thus, in a normal distribution curve, such a period is set to lie beyond the mean and helps to project the future income during such seasons.